The Ministry of Economy has published new rules allowing firms in the United Arab Emirates to use existing shares when listing on local exchanges or raising fresh equity capital, reported Khaleej Times, adding that this move is likely to boost private equity in the country.

Laws governing initial public offerings (IPOs) in the UAE have long been criticised for their restrictive nature, including the need to list at least 55% of a company and for only allowing the sale of new shares when going public, reported Gulf News regarding the same topic.

Private equity groups are expected to be among the main beneficiaries of the new law, as they could utilise capital markets to exit existing investments instead of relying on trade sales to other investors to off-load holdings.

According to a July 1 ministerial resolution on firms converting to public joint stock companies, founders of a company can list shares through a sell down of a certain percentage of their existing stock, added Khaleej Times, noting that the resolution-document did not specify a minimum percentage which any seller could off-load.

It is worth noting that the new law will not come into force until one day after it is published in the official gazette.